and 22nd where we feature our visit to alaska. watch alaska weekend on c-span, c-span.org or listen on the c-span radio app. now, we will hear from maine senators susan collins. e chairs the committee on aging. pew charitable trust in washington, d.c., this is about one hour. >> good morning, everyone. i am the executive vice president and chief program officer at pew charitable trusts. we have a diverse mix of initiatives ranging from health, state, consumer and environmental policy initiatives. to advancing biomedical and environmental research to support our hometown of

philadelphia. i know that july, the middle of july is prime time for leaving d.c. for beautiful and perhaps in philadelphia. i know that july, middle of july is prime time for leaving d.c. for beautiful and perhaps, cooler places like the coast of maine.i am particularly pleased to welcome all of you here today and all very special guest, senator susan collins from the great state of maine. we are recording this event. so it can be prevented on our podcast called after the fact. it will extend the reach of senator collins remarks beyond this and beyond today. before invite senator collins to the podium i wanted to spend a minute giving a brief overview of her extraordinary career and the bipartisan effort that she is leading to stop the escalating cost of prescription drugs. senator collins weapon maine and graduated from st. lawrence college. within months of finishing college she was working in the office of senator william kohn

also from maine. this lasted 12 years and worked on the government affairs subcommittee on oversight of government management. also worked as commissioner of the department of professional and financial regulation. under former maine governor and the regional director of the font small business administration for president george h. w. bush. in 1996 senator collins was elected to the u.s. senate. in the years since, she has never missed a roll call vote. that is more than 6600 votes in a row. the people of maine clearly trust and admire senator collins and so did her senate colleagues. for the past four years, she was ranked the most bipartisan member of the senate by the lugar center at georgetown university. here at pew we talk a lot about the importance of public service. senator collins unbroken record of constituent service and fulfilling her constitutional duties pretty much define the term. today senator collins is here to help us better understand her work.

she worked closely with colleagues in both parties especially with -- early this year she introduced legislation to eliminate pharmacy gag rules. that prevent patients from knowing the lowest possible cause for prescription drugs. just last month, the senate judiciary committee passed legislation cosponsored by senator collins that will increase competition and increase the affordability of drugs for all americans. senator collins is a leading voice here not only for fear drug prices and better health outcomes but for ability and generosity produce my great pleasure to introduce senator collins. [applause] >> thank you and good morning to all of you. i am delighted to be here to join in an important discussion and i want to commend the pew

charitable trusts for its extensive research, work in so many areas including drug spending research initiatives which i am very much looking forward to seeing the results of. i want to acknowledge kevin kelly of my staff. here is a staff director of the aging committee. actually, worked here for a while, a couple of years. in between sense, my office. and so, he knows well, the terrific work that the pew charitable trusts does. i also understand that we are going to be joined boy or have been joined by the pew president. there she is. i see her. i read all about you last night. it was really impressive. your medical background, they

were able to convince physicians to allow you to be a professor of neuroscience shows that not only are you extraordinary in your ability but persuasiveness. thank you for making the effort to be with us today. today, i am going to discuss the work that i've been doing at the federal level to combat the rising cost of prescription drugs. to ensure that patients have affordable access to the therapies that they need with prescription drugs being identified in virtually every study. as one of the key cost drivers for healthcare, it is essential that we better understand the underlying causes of soaring prices so that we can develop

and implement policies that both encourage innovation and the development of new drugs while protecting consumers from escalation that has no justification. the past century could well be called, the age of miracle drugs. from the insulin to penicillin to pharmaceuticals that treat cancer, hiv, heart disease and so many serious health conditions. modern drugs improve, extend and even save lives. in our time however, we might find a miracle drug as one that has not doubled in price, since the last refill. over the weekend, the wall street journal reported 3653

price increases. on a little more than a thousand different drugs. since the beginning of this year. some of the price increases were modest. others, undoubtedly were justified. in the case of a spray version of a common sleeping aid, the price soared from $69.80 to $650. it is very difficult when you read this, we have not specifics yet but to see any justification for that kind of price spike. the issue, after all, is about people. it is about patients who need

required medication. it is about their family members. and their friends and neighbors who are worried about their struggle to buy the medications that they need. this was brought home to me in a very real way recently. when i was standing in line at the pharmacy in maine, where i live, and i was right behind a couple and i was not meaning to eavesdrop. but their raised voices made it impossible for me not to hear their conversation with the pharmacist. their co-pay was $111. and the husband turned to his wife and said, there is no way that we can afford this. and they just turned around and left it right there. i was so troubled by seeing

that. because obviously, this drug had been prescribed for them. so it was something that they needed. one of them needed. so i queried the pharmacist about how often this happens. and imagine my dismay when his response was, it happens toever day. the cost of these vital drugs is not just a theoretical concept or an interesting research project. it has a real impact on individuals, healthcare and the federal government. americans spend a staggering $328 billion on prescription drugs each year. the federal government picks up

about hundred and 29 billion of that in payment through medicare, medicaid, the veterans affairs chip program and other programs. so, in november 2015, alarmed by these price increases, as chairman of the senate aging committee, along with then ranking member, claire mccaskill, i launched an extensive bipartisan investigation into the extreme spike that we were seeing in drugs that have been off patent. in other words their patent that had expired. and yet, they did not have a generic equivalent. the drugs that we examined ranged from nitro press which is used to treat dangerous cardiac conditions and it's

often found as a standard drug on hospital carts. for drugs used to treat rare genetics diseases. severe infections such as tuberculosis. and other life-threatening conditions. the findings of our investigation were troubling to say the least. at the first hearing in december 2015, we centered on four companies that it had acquired decades old, off patent, affordable drugs and then raised their prices suddenly and astronomically. so that there were no longer affordable. i remember that one of the drugs had first been, entered the marketplace the year after i had been born. it was on 1953 that it first

became available. it had been off patent for many, many years. and stably priced for many, many years. the investigation uncovered a monopoly business model that these companies used for selecting lifesaving prescription drugs. for example, the price of a drug used to treat wilson's disease, a rare genetic disorder, that is fatal if left untreated. increased from $652 per month to more than $21,000 per month. that is more than a 3000 percent increase in price. with no justification.

our committee staff interviewed hundreds of patients, doctors, hospital administrators, other healthcare providers, consumer advocates, academic experts and pharmaceutical industry executives and their board members. we reviewed more than a million pages of documents. many of which we subpoenaed. from these four companies, we deposed or took transcribed interviews of 10 corporate witnesses. we have three public hearings and issued our report with our findings and recommendations. regrettably, we issued that report in december of an election year. it really did not get the attention that it deserved. but the recommendations remain valid and it remained a source that we are working on.

one of pew's dateline articles on drug pricing featured a photograph of -- that was taken during his testimony before congress. his truly is the face of this egregious business practice. as he formally headed two of the companies we examined. today, he will not be found at any fancy corporate headquarters but instead, among the inmate population at the fort dix federal prison where he is serving seven years for securities fraud. i was struck by an interview that he gave in which he said why did you raise the prices of these drugs so exorbitantly and he answered simply, because i

could. the committee discovered that each of the four companies that we closely examined followed a business model that gave them de facto monopoly pricing power enabling them to impose and protect astronomical price increases. the business model consists of five central elements. first, the companies would look for a sole-source drug for which it was only one manufacturer and therefore, would face no immediate competition. maintaining complete power over its pricing. second, the company would ensure that the drug was considered the gold standard. the best drug available for the condition that it treats. third, the company would select a drug that serves a small

patient market. and this was because they figured that these patients would not be able to organize effective opposition. they also calculated that if the patient pool were small, it was unlikely to be that attractive to generic competitors. and that gave the companies more latitude to hike their prices. fourth, the company would control access to the drug through a closed distribution system. a specialty pharmacy or some other means, making it more difficult for competitors to obtain a sufficient amount of the drug to do the bio equivalency test that the fda requires to enter the market.

finally, then the company would price gouge. maximizing profits by jacking up the prices as high as possible. now i want to stress that each of the drugs that we investigated had been off patent for decades. here's another really important fact. none of the four acquiring companies had invested a single penny in the research and development of these drugs. furthermore, the committee found that they were doing nothing to significantly improve the drugs that would justify the exorbitant price increase. there were no increases or

distribution costs. that would justify the cost increases. here is an example of the business model in action. -- at one point was run by martin, raised the price of a drug, a gold standard for toxoplasmosis. from $13.50 a pill to $750. literally overnight! then, they put the drug in a closed distribution system. these closed distribution systems, one example of which is the rem system is intended for drugs that have serious side effects. so you want to make really sure that the distribution is carefully controlled. it is not intended to prevent a

generic drug company or some other competitor from buying up enough of the drugs to do the bio equivalencies tests that i mentioned earlier. here is another example. theory raised the price for a drug for rare genetic kidney disease from a dollar 50 per tablet to $30 per tablet. and once again, instituted a closed distribution system. i could go on and on. let me give you one more example. they raised the price of a drug that is the gold standard for a type of tuberculosis from $500 for 30 capsules to $10,800 for

the same 30 capsules. i do not know how these companies can live with themselves. i must say! the largest of the companies that we investigated presents the most complex case. this company spiked the price of not one off patent, gold standard drug, but four. raise the price of two hospital drugs are lifesaving in emergency cases. for cardiac arrest. the business model, employed by these four companies were also actively supporting and it was promoted by investors on the board. all four companies had close relationships with activist investors who were intimately involved in the direction of

the companies and a lot of emails that were back and forth. in the case of -- internal emails revealed how an investor outlined the business model to the then ceo. writing quote - funny that these small companies still have not realized that you can raise the price aggressively and nobody gets too upset. this dynamic may not last forever. you need to maximize the opportunities while you can. sudden price spikes in decades-old drugs have devastated patients and families throughout our nation. dozens of people call the company to share their personal stories. people have been forced to go without vital medicine or to

use less effective drugs. people are skipping doses, they are holding pills out of fear that the next refill will not arrive or will be unaffordable. poignantly, patients reported the anxiety they watch the prices climb and felt so helpless to do anything about it. hospitals too, have been forced to make extensive changes. while simultaneously facing great uncertainty and suffering budget repercussions. as much as $12 million per year more for one hospital system for those drugs that i mentioned. in an effort to reduce cost hospitals have taken aggressive steps to reduce their usage of these even though they may be

the most effective means of treating a patient. the increased time administrators, physicians, nurses to treat patients spend in developing policies and learning and implementing new protocols is time away from direct patient care. hospitals even reported having to hire new full-time employees just to assist patients with administrative processes of being able to obtain medicine in the face of soaring costs. what we started to see were rural hospitals which were already barely hanging on being really hurt by these drug cost increases. our investigative work continues today. when hearing earlier this year

was on rheumatoid arthritis drugs. and it revealed that medicines developed decades ago to provide relief from the painful condition, have doubled in price since 2012. a hearing that we held in may on the cost of insulin, provided the very definition call -- they discovered insulin in 1921, they revolutionized the treatment for diabetes. transforming it from debilitating and fatal disease to a manageable, chronic condition. these scientists sold the patent for one dollar each to the university a move intended to ensure that those in need

would always have affordable access. the price for a vial for example increased from $35 from 2001 to $234 in 2015 and to $275 in 2017. we had a father with a son with type i diabetes testify at our hearing how frantic he was to find affordable insulin for his son. he finally found the best way for him to get it was from canada. so he went so he could get it from canada. he should not have to do that.

and i am really worried, given the escalation of the cost that we can't figure out why or get a good explanation. there have been some modifications for different kinds of insulin. some act more quickly, some act more slowly. but insulin has been around since 1921. the cost increase may be due in fact from a practice called evergreen. that is when pharmaceutical companies obtain new patents for drugs that they have based on small innovation. the result of which, is to extend a market on the drug beyond the initial patent expiration. although the small changes may make a tremendous difference

for some patients, the improvements may not be worth the additional cost for some. but you know it it is like, we always want the newest, the best, what is the new thing on the market. even if it may not really be worth the additional cost. for insulin, a careful look is warranted to determine if the modifications were used just to extend the patent protections and discourage competitors. and this brings me to the important question of, what can congress do about this? following our initial investigation, i co-authored a bipartisan bill with senator mccaskill to promote competition to help lower the cost of prescription drugs. our goal is to help sponsor a more competitive marketplace.

and it was signed into law last year as part of an fda reform bill. as the result of the new law, fda is taking action and last month, they publish an updated list of off patent drugs that do not have an approved generic. that is a welcome dose of sunshine because it helps the competitor figure out which drugs patents have expired, that was required by our law. the fda also established they want more competition for where there is no more than one more approved generic. what we found was that you generally see the price when they were to generics.

we are beginning to see progress since june 2017, fda approved generics for 11 drugs that were formerly sourced and last month, fda reported that there were 16 designated abbreviated new drugs and applications awaiting fda action at the end of march. that is an increase from three awaiting action at the end of december 2017. but more remains to be done. the health committee on the senate health education labor and pensions committee is delving into this issue. at the health committee hearing last fall, i focused on the role of pharmacy benefit managers. also known as pbm's.

i learned that some contracts between pharmacies and pbm's contain so-called gag clauses that prohibit pharmacists from telling consumers if their prescription would cost less, if they paid for it out-of-pocket, rather than using their insurance. they can only answer the question if the consumer asks. it is so counterintuitive to think that paying out-of-pocket is going to be cheaper then using your insurance. using your debit card will save you money over using your insurance card? who will think to ask that? so, i was outraged when i learned about this process. and i was so grateful to these

pharmacists from maine. for coming to me and telling me about it. a basic question is, how can it be that an insurance company is prescription to fit manager whose very job it is to negotiate lower prices could instead be leading consumers to pay more for a drug then they otherwise would have two. due to the publicity, a lot of pbm's have dropped these and the head of cmf has also sent out a letter saying that they are no longer acceptable. but we want this to be law. we've introduced two bills paid when that would go to finance and applied to medicare and medicaid programs. one to the health committee

that will apply to private for the affordable care act program, private healthcare programs, to make sure that this practice is ended once and for all. a common thread in all of our investigations and hearings is a lack of transparency. in the pharmaceutical system. what we have noticed was that price varies on a number of factors that includes the list price set by the manufacturer, the fees charged by distributors, wholesalers and other middlemen such as the pbm and a lot of times, the negotiated price was not passed on to the consumer. sometimes it is used to lower

premium. that may be a good thing in some places. but a lot of times the consumer -- the impact of the negotiations. we also found that these overlapping relationships have a system that is ripe with conflict of interest and perverse incentive. for example, if you are a pbm and you are controlling which drugs are listed on an insurers formulary, the manufacturer has the perverse incentive to have a higher list price because then, the pbm, who is often paid on a percentage basis, is going to get more and the manufacturer wants that drug included on the formulary. it seems to me, there is

conflict of interest right there. although, to be fair, we are still investigating this. we did the hearing on insulin, the american diabetes association, which has spent a great deal of time gave us the charge and it is unbelievably complex. when we asked them to explain it, they essentially threw up their hands. despite the extraordinary research that they have done. that is how opaque the system is. healthcare is complex enough for consumers to navigate without the added confusion of a drug system that is so opaque. i will say that i have raised

this at hearings and in conversations with the fda commissioners and im very impressed with him. he agrees that the current system is too complex. it is opaque and at times, it seems to be designed to benefit everyone except the patient. the commissioners especially passionate about redesigning the rebate structures to ensure that savings are passed on to those who need the most, the patient and their families. he has announced that the fda will expedite generic entry for cases with a limited competition. and he has stated his commitment to increasing competition overall. which is very encouraging.

i am also encouraged that in congress, at a time bipartisanship seems like an increasingly rare commodity, that this is an issue that can bring us together. while the lions share of work remains to be done the milestones so far demonstrate a pattern of working together to cross the aisle, to help reduce the cost of prescription drugs. if we want new medicines to reach consumers who need them, the companies that invest in r&d must see a fair return on their investment. and i recognize that. at the same time, we cannot allow price manipulation to continue at the expense of some of the most vulnerable americans and their families and ultimately, at the expense

of the american taxpayer. the required policy solution won't come in the form of a miracle. but with hard work to better understand precisely what is happening and continued bipartisan cooperation. i want to thank you for being part of this effort and it is something that matters greatly to me. we're going to continue working on it in the aging committee and in the health committee and continue to work on solutions for a very complex problem. thank you, and i would be happy to try to answer questions. [applause]

>> good morning, senator. thank you so much. i work with women's state legislators around the country. i'm wondering if you have thoughts on how federal legislative leaders and state legislative leaders can work together on this issue? >> i do have thoughts on how we can work with our state counterparts. and that is a very important question. because having spent five years overseeing the bureau of insurance, i'm very much aware that insurance is still largely state regulated. that changed for the affordable care act but the state bureaus of insurance play a critical role. so, pharmacy gag clauses are a perfect example of where some states have already started acting to ban them. another area is innovation that

states are doing with the medicaid program to do more price negotiation. i think there are some 16 states that are using one particular company to do negotiations and select drugs for the formulary. i will tell you that i get an awful lot of complaints from physicians, nurse practitioners, physician assistants who have prescribing ability about how difficult it is to get drugs that are not on an insurers formulary. and yet, are needed by their patients. and that it can take hours of their time to get an exception. and that is one reason by the way, if you look at cost drivers for healthcare costs,

administration is one of the cost drivers. i do think there is more that we can learn from what states are doing in this area. and incentives they are using and medicaid programs as well as work to ban gag clauses. there is also an interesting law just going into effect in the state of maine. it applies more to procedures than to prescription drugs. but the idea has a possibility and that is, it says that if you can find a healthcare provider that can do a knee replacement for example, at a far lower cost that would be covered by your insurer, that you split the savings with the insurance company.

now, i do not believe the law has gone into effect yet. so we do not know the results. but the state says it is often been said, the laboratory of innovationand think we can learn a lot from them . yes? >> i am carl, a longtime analyst. thank you for your comments in all of your work. a couple of questions. you started off with blatant violations and price gouging. what can be done on that front? the other thing is on drug pricing and transparency. it just seemed like this is the only market that has a system where we don't know what the prices are. shouldn't it be a law that says they have to be at least posted after-the-fact at some point so we can have a market? >> those are two great

questions. i don't think the ftc has done a good job on this at all. i remember when doctor janet woodcock, her testifying and my asking about this issue. or the issue coming up. and she talked about the number of referrals that the fda had done to the ftc and basically, very little, if anything happened. i don't know whether this is a matter of inadequate resources at the ftc or an adequate expertise. but clearly, this is something that we need to look into. and we also, i agree with you, i think it raises really trust questions and it is the ftc as well as the justice department but it is really the ftc that is the lead on this and i think we need to figure out why they

aren't doing more and rectify that problem. it also calls out for looking at our patent laws. i am definitely for having a period of exclusivity. because if you develop a blockbuster drug and you have invested literally, hundreds of billions, even $1 billion, you do need time to get the return on that investment. what i am seeing more and more, is that the end of that period of exclusivity, there is a change in packaging, for example. so that the eyedrop instead of coming in daily, packaging, now is a little bottle that gives you a week supply. i am very dubious about whether

that deserves the kind of exclusivity that the initial drug development does deserve in my opinion. that is the evergreen issue i was talking about. to get to your second question about the opaqueness and the rebate system. i have a theory about these consumer rebates. and that is, that they are largely intended to keep the patient using that drug. i do not want to name specific drugs because there are many. but i had a specific drug prescribed to me, for me, that i really did not think worked very well. and then i learned that there

was a rebate available. which is not available under medicare, by the way. under the antikickback. and that is significant.if the co-pay is free to they might as well stay on it. even though it is very expensive. that is not a good situation. it sounds like it is good because we want to help patients. but it keeps the price high. and it is part of the opaqueness of who is paying what and how much the drug really costs. i have pharmaceutical companies come in and show me their list price versus their net price and i do not understand it because i have seen these huge increases. who is getting the money? where is the money going? it is a classic follow the

money. it really is! and we do need more disclosure of prices. one idea that has been introduced is on television ads, to list the price. but what is the price? i don't know how you would figure out what price to list. so, we have got to figure out a better way to end this opaque system and figure out what the real cost is. otherwise it will be like the side effects that are listed on you know when you tune them out instantly. especially when they start mentioning death. you know? and i'm afraid they would be, the price, a 30 day supply is

$250, except, different prices may apply in case of rebates or depending on your formulary or depending on your insurer, depending if you medicare, i just -- i'm not convinced that is the answer but we need to address that.you are absolutely right. the other issue related to that is efficacy. i have often wished on some of these ads on television, that they're not only a way to talk about the price, but how many patients does it really work for? there is one particular drug that i know has a 12 percent efficacy rate. now, i wonder if that were known, if people would be running to their prescriber and asking for it. when i ran to my prescriber and i asked for it she said to me it had a 12 percent efficacy

rate and we both said, forget it! given the cost. i think we need way more information. let me just end because i'm getting the times up sign. by saying, we really need your help. there are a lot of experts here at pew, but also in this room. we really need your help to figure this out. it is so obscure and opaque and yet, it has such a tremendous impact on our healthcare system and on our healthcare provider and most of all on patients and families. i still cannot get it out of my mind and i hope i never do, that couple in front of me at the pharmacy. that could not afford the $111

co-pay and walked away from the medicine that they needed. i cannot get out of my mind the librarian who testified before us who has wilson's disease. and was switched to a less effective drug. because she simply could not afford the co-pay. i can't get out of my mind, the father from maine with the child with type i diabetes. who was in an utter panic about how he was going to be able to afford his son's insulin. we have to come up with a solution. and with the help of people in this room, i think we can. thank you so much!

[applause] >> i want to thank everyone again for coming today and thank you senator collins for a fabulous speech. thanks everybody! [applause] [captions copyright national cable satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> the house convenes for morning hour at 10:00 a.m. eastern. they will take up a number of bills under suspension of the rules and making changes to the dodd frank regulation laws. on c-span2, the senate continues work on judicial and executive nominations. c-span3, jerome

powell testifies before the senate banking committee on monetary policy. that is live at 10:00 a.m. eastern. you can find all of that on c-span.org and on the free eight -- radio app. sunday night on q and a, the daughter of the american to the mat george karen. her memoir.s for -- in 1991.vladimir putin >> was the deputy mayor then? >> he was. and had a meeting with the real mayor. the mayor was called away and they substituted the deputy mayor. i was annoyed that i was not meeting from the mayor. i knew putin had been cagey b wasi was net -- kgb and i

negative of it all. he was negative two. he was very suspicious -- he was negative too. he was very suspicious of women. he had the coldest eyes i have ever seen. very big blue, cold eyes. all i could think of was, i wonder what would happen if he was interrogating me. >> sunday night at 8:00 eastern on q and a. major league baseball's commissioner is an washington, d.c. for the 2018 all-star game. he talked about government -- governance issues, player diversity and the league policies during a luncheon hosted by the national press club. it runs an hour.